Can someone walk me through this Bond Evaluation/ Bond Valuation question?
What's the answer to these question??
Last year Joan purchased a $1000 face value corporate bond with an 11% annual coupon rate and a 10-year maturity. At the time of the purchase, it had an expected yield to maturity of 9.79%. If joan sold the bond today for $1060.49, what rate of return would she have earned for the past year?
You are considering a 10-year, $1000 par value bond. Its coupon rate is 9% and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 8.16%, how much should you be willing to pay for the bond?
Thanks a lot!
I am slow.
1) Find the PV of the bond in the original year, then subtract the selling price from that to find total profit. Take that total profit and divide it by the PB of the bond in the original year and subtract one. That'll give you the rate of return.
take your college homework shit outta here..
Agreed. What the fuck is this shit?
I got 12.9% for number 1.
That's why I'm working at GS and you're not.
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